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Senior Advisor

Lifted Soybean Hedges

Well, after looking at 8.60 and wondering if I should lift my hedges, mostly because Soy Roy Smith suggests early October is the low of the soybean futures, I got to talking to my broker who said his info was that soybean futtures were lower near the end of October and he was seeing 8.30 as a target.


So, greed and indecision taking charge, I sat on the soybeans shorts and watched them go to near 9.00.  I finally decided to pull them in the high 8's.  Just watch, soybeans will go lower and I'll kick myself even more.


For a couple of years I've floundered around with this decision.  Next year, my bias will be stronger to follow Soy Roy and lift the soybean hedges in early October.  My floundering cost me about 35 cents a bushel.


So, now I'm naked on soybeans with nothing in the bin priced.  I'll probably sell them this fall on a river close time-table, probably last half Nov for delivery to Burlington.  Processors in Cedar Rapids have no need to push bids because they'll have all winter to pick up beans from farmers who don't take the river close bump.


I usually don't carry many beans over.  Some years it pays to carry them over; recently it has some times.   If South America has a bad crop I'll wish I'd held some.


My reasons for getting rid of beans early have to do with prices, storage risk, cash flow, etc. etc.  


That's were I am in another so-so soybean marketing year.  Hedges paid well, but should have put them on earlier, didn't sell again at the July rally, lifted them on a rally instead of the bottom and will now be simply speculating with the cash side, but not for long.  Waiting for Soy Roy's Dead Cat Bounce, which has paid well for me most years.  I think Roy is the most consistent bean marketer out there.

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Frequent Contributor

Re: Lifted Soybean Hedges

We're always learning when it comes to marketing.  I had my Nov 15 beans 100% hedged by spring 2014, but I lifted the hedges late winter / early spring expecting to re-hedge this summer.  I had cash contracted about 20% as I was taking off the hedges.  I contracted another 20% on the July run up, but didn't re-hedge (fell about 20 cents short of my target - too greedy).  I reowned my contracted beans in late July, figuring all the talk of poor beans in the east would give the market a pop out of the Aug USDA report.  Should have took my profit on those long before the report and re-hedged, but again I was too greedy.  So I ended up covering my longs and selling the beans I didn't store on these recent probes above 9, plus hedging what I have stored.  This is the first year I've tracked the dead cat bounce locally, and just putting the numbers in the spreadsheet and watching the trend helped with the harvest sales although I didn't follow the method to the letter.


Local basis just tightened another 5 cents (improving 12 cents total in the last couple of weeks), which really surprised me considering all the big yield talk in WCMN.   Seems like there is plenty of demand that isn't reflected in the USDA projections for this marketing year.

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